Infosys CEO Vishal Sikka resigned on Friday after three years at the helm. Photo: Abhijit Bhatlekar/Mint

While it is tempting to look at the simple performance of the Infosys Ltd stock price during Vishal Sikka’s tenure between 1 August 2014 when he took over as CEO, and Friday, when he announced his resignation from the post, the problem with the measure is that it is noisy—the performance of the Infosys stock depends not only on investors’ view of the company’s performance, but also on the IT sector in general and the Indian economy itself.

In order to accurately measure what the markets thought of Infosys’s performance in this period, we need to strip out the “external noise”, which can be done by looking at the Infosys stock price with reference to the Nifty Information Technology Index. This way, external influences such as health of the sector and the economy can be stripped out.

Figure 1 shows the performance of the Infosys stock relative to the Nifty IT Index during Sikka’s tenure. It shows the markets were broadly positive to Infosys’s performance during this period, with the stock outperforming the index (which it is a part of) by over 20 percentage points during the time period. In fact, the chart shows that as of mid-2016, the markets were far more bullish about Infosys relative to the sector.

On the other hand, markets were far less charitable to the tenure of founder N.R. Narayana Murthy (currently engaged in a war of words with the company board) as executive chairman, which immediately preceded Sikka’s tenure. As Figure 2 shows, the firm underperformed the sector by about 7 percentage points during this time period, with markets indicating their displeasure on the very day Murthy took over as executive chairman.